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Big Day: Rebound, or Rally Failure?

By  +Follow August 23, 2013 12:18AM
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Get ready for  commentary about taper, etc.  from the Jackson Hole Meeting.

Unfortunately, the Street isn’t sure what to do, and its confusion notches to new highs every time a Federal Reserve official airs an opinion.

  I do not think  the Street’s concern is really about a taper in September, or later so much as it is about a change in Fed policy which in time means a total withdrawal from QE.

   The Street  has started  its own withdrawal process, doesn’t know the consequences of the end of QE, and is becoming doubtful that even the Fed knows what to expect.

  The economy is gaining traction, so no one wants to miss what should be another increase in stock prices, yet there is a short-term risk  the market will plunge in the interim in face of uncertainty.

 CONCLUSION:

Investors are in a quandary.  They don’t want to miss an up-move, but are scared of getting skewered by a plunge in prices.

   Yesterday’s jump indicates the potential for a nice rally back up to DJIA 15,275 (S&P 500:1,688).

   The market  may get a boost from news out of the Jackson Hole conference.

   The risk here is that today’s rally, or its extension into early next week, will comprise a rally failure with another leg down in the market to follow.

  Nimble traders with chair close to the exit may want to step out of the on-deck circle and take a few cuts.

  Others  may nibble at stocks of choice so long as they have a cash stash in line with their tolerance for risk.

 

P.S.: Nasdaq had its problems yesterday. Maybe  these guys should have a pow wow with the folks at Foxwoods  to get some insight on operating a casino.

Investor’s first readan edge before the open

DJIA:  14,963.74

S&P 500:  1,656.96

Nasdaq  Comp.: 3,638.70

Russell 2000:  1,036.18

 Friday, August 23, 2013     (9:10 a.m.)

   TECHNICAL OBSERVATION – STOCKS:

The following are observations based solely on technical analysis and don’t give consideration to fundamentals or changes in brokerage ratings which can  have an immediate impact on stocks, justified or not.  The idea here is to give readers insight into the likely trends and turns in the stock’s price, short-and long-term.

   I picked up on AAPL and FB last year when they were in a tailspin, and  picked up on IBM recently for the same reason, and am including Pulte, since it has been in a  pronounced slide.  These are not  buy or sell recommendations, and are not stocks I have recommended.

I will most likely focus on quality stocks that have had a decline and seek to assist readers in targeting points where the stock will find temporary support levels and hopefully the final support level from which the stock can turn around.

   Again, these are purely technical assessments without consideration for fundamentals.

  Apple(AAPL: $502.96 )

Note: Targeted Turn around Apr. and Jun. 2013 (double bottom).

Pattern: Positive, consolidating recent up move.

Resistance: $505

Support is $501. Could slip to $485 in bad market. Would an acquisition of Nuance make sense. Icahn has big positions in both ? I am not big on dividends. When they go “ex” the price of the stock is decreased by the amount of the dividend.  What doesn’t the Street publicize this ?

  Facebook (FB - $38.55)

Note: Targeted turnaround Sept. 2012

Pattern: Positive – consolidating recent up move between $36 and $39.

Resistance:   $38.74)

Support:  slips to 36.25 (minor support is $38.20)

  IBM ($ 185.19)

Note: Started coverage  Aug. 7, 2013 after big plunge in stock

Pattern: Negative

Resistance:  $186.20

Support:  $184.25,  but I still see $181.  Breaking that, look for $174   Be aware that IBM has ranged four times up and down between $185 and $215 over the last two years.  Unless the fundamentals are horrendous  it is due for institutional buying, most likely in this area and possibly at or a smidge below $180.

Right now, there are sellers that must be taken out.

Each point up or down impacts the DJIA by about 13 points.

  PulteGroup (PHM- $ 16.32)

Note: Started coverage Aug. 12, 2013

Pattern: Positive, but test of lows  needs to develop in coming weeks to cement  upturn. A break below $16.10 would  be an alert that is about to happen. The Street is on edge about how much a rise in mortgage rates will impact the homebuilding. Housing industry. Common sense say it will have a temporary impact, but rates are still low, house prices rising and inventories down. If people want to buy a house, they had better not tarry long.

Resistance: $16.50

Support: $15.75  (minor support: $16.10

First Solar (FSLR:$ )

Note: Started coverage: Aug.: 22

Pattern: Negative, but can press up near $40 if resistance at $38.65 can be penetrated. Big gap down between $46 and $42 will be hard to work through without unexpected news.

Resistance:$38.95

Support: Rises to $38.75.  Stock has had some nice buying in last three days. Odds favor a sideways basing action between $37 and $40.

Target (TGT: 39.02 )   Heads up !

Note: Started coverage Aug: 22:

Pattern: Negative

Resistance: $65

Support: Blew right through  $68 support like someone dropped a barbell in the gym. But it has  three spikes in volume in two days indicating institutions are dumping but suggesting SOMEONE is buying ! Possible reversal today near or a bit under $63.

TGT down$2.45  yesterday from $73.50 peak in July on Q2 earnings miss.

Hewlett-Packard (HPQ: 22.45)

Note: Started Aug.23

Pattern: Negative, probing for comfort level

Resistance: $22.50 which could be broken by a spike to $22.75.  A volume spike at the close yesterday suggests a buyer “caught” a block for sale.

Support: $22.45 but untested. Penetration raise chances of $19.85

 I do not own, nor am I short  AAPL, FB, IBM, PHM, FSLR ,TGT, or HPQ

ECONOMIC REPORTS:

Thursday reports dominate the week.

   For a detailed account of past and current economic reports, including charts go to: mam.econoday.com - www.mam.econoday.com.

THURSDAY:

Jobless Claims (8:30) Increased 13,000 to  336,000 for week 8/16

PMI Mfg Ix. (8:58)    Index for  August of 53.9  vs. 53.7 mid-month.

FHFA House Price Ix. (9:00)   +0.7 pct July  vs. +0.8 pct June

Bloomberg Consumer Comfort Ix. (9:45) 

Leading Indicators (10:00)   : +0.7 pct. July

Kansas City Fed Mfg. Ix. (11:00)  Index rise to +8 in August vs. index of 6 in July and minus 5 in May.

Federal Reserve’s Richard Fisher had little new  to add about QE but was highly critical of Washington gridlock.

.FRIDAY:

New Home Sales (10:00)  Proj.: 487,000 unit rate in July  vs. 497,000 rate  in June

RECENT POSTS:   2013

Aug 13 DJIA 15,419   “Homebuilders Ready for a Bounce ?”

Aug 14 DJIA 15,451   “Hindenburg Omen – Worth the Worry ?”

Aug 15 DJIA 15,337   “October Buying Opportunity at Much Lower Levels”

Aug 16  DJIA 15,112  “Fed Pressed for Clarification – Rallies Suspect”

Aug 19  DJIA 15,081  “Will Fed Intervene to Stop the Carnage ?”

Aug 20  DJIA 15,010  “Rally Ahead of Wednesday’s FOMC Minutes”

Aug 21  DJIA 15,002  “No September Taper = Bad For Stock Market”

Aug 22  DJIA 14,897  “Street’s Angst Not About First Taper, but……”

  George  Brooks

“Investor’s first read – an edge before the open”

This email address is being protected from spambots. You need JavaScript enabled to view it.

……………………………………………..

The writer of  Investor’s first read, George Brooks,  is not registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk. Brooks may buy or sell stocks referred to herein.

 

 

 

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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By  +Follow August 23, 2013 12:18AM
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